Launch of the AVFB
Published in Niche Magazine 08/2004


The launch of an Association for Vehicle Finance Brokers - the AVFB- has been welcomed by both brokers and funders. Niche Commercial Finance talks to the founders of the Association and finds out what it plans to offer the industry.

Early June saw the official launch of the Association of Vehicle Finance Brokers (AVFB) as a division of the National Association of Commercial Finance Brokers (NACFB). The new division launched with over 50 members who transact vehicle finance.

Keith Heron, chief executive of the NACFB says that the recent growth in the sector was the main reason for the founding of the Association. 'Most of the UK's leading contract hire companies now recognise their own broker division or the use of external brokers as their main route to the sub 50 fleet market.'

Heron says that the time for the launch of the Association is now. 'The majority of people within the fleet industry recognise that there is a need to self regulate the 2,000 or so vehicle finance brokers currently trading, some of whom are generating volumes of business that would be enough to qualify for the Fleet News league table of the top 50 contract hire companies albeit without taking the financial risk on disposal.'

The AVFB will be run by individuals who have vast experience in the sector, including Stefan Erentraut, board director of the NACFB and managing director of MVM Vehicle Contracts, Martin Brown, managing director of Fleet Alliance and Nick Mohan, manager, niche schemes at Perkins Slade Insurance. They will be supported by a steering group comprising of individuals with relevant skills and experience in the market place.

'One of our main aims is to assist in moving the market to the next level, by leading research into software development and assisting brokers with legislation on how to tackle new FSA regulations on insurance products.' says Brown.

The AVFB plans to have a published code of practice for which OFT approval will be sought in due course. And, on reaching target member numbers, the Association plans to appoint a full time specialist to assist members with any issues they may have.

Brown says that one of the main aims of the association is to provide back office systems to brokers. It is these systems that he says will attract brokers to the Association. 'One of the biggest barriers to growth for smaller vehicle finance brokers has been a lack of back office support, with many over burdened with the added cost and time management issues of administration. Our plan is to provide back office support and funding lines.' he says.

Brown says that the back office systems offered by the Association will also help brokers cope with the imminent general insurance regulatory regime by the Financial Services Authority (FSA). ' Brokers will now be deciding whether to stop offering general insurance products or to look for an opportunity to continue,' says Brown. 'Our support systems will support brokers and help them continue offering insurance products.'

Heron at the NACFB says that the vision of the Association is to become a support centre for the ever increasing number of vehicle finance brokers who exist throughout the UK and to achieve wide scale acceptance for its members similar to that enjoyed by their commercial finance and leasing colleagues.

'The AVFB will be working hard to encourage contract hire companies to be more selective when choosing vehicle finance brokers and the presence of the AVFB in the broker market can only be positive.' he says.

News of the Association has certainly been well received by the industry with major fleet funding companies giving their support saying that it will help raise standards in the industry.

George Grant, managing director of Bank of Scotland Vehicle Finance, which operates a fleet of 92,000 vehicles, welcomed the new Association. 'I am happy to give my support to an organisation whose main aim is to raise standards in the industry we all work in.'

He also welcomed the introduction of a kite mark endorsement of quality standards that would bring credibility to those receiving it.' he said.

Grant, whose Edinburgh based company receives a significant proportion of its business through its broker network, said it was up to the industry to ensure that best practice was implemented, as the fleet industry had not been subject to the same degree of regulation that other industries had witnessed.

Saul Parsonson, managing director of Lombard's vehicle leasing arm, which works with a network of over 150 brokers and operates a fleet in excess of 104,000 vehicles, said, 'We would support any initiative that enhances the reputation of the introducer sector. The new Association is trying to improve standards, increase professionalism, introduce a code of practice and encourage professional indemnity insurance these are all positive moves and by achieving this, the Association will place us in a stronger position in the industry.'

Gordon Stephen, managing director Of 5000 strong Ogilvie Fleet, also welcomed the new Association and its drive to improve standards. 'The initiative will bring benefits to both sides; it should provide reassurance that we as fleet funders are dealing with reputable companies, as well as providing clear and identifiable standards for brokers.' he said.